Discount Discounting for Stigmatized

A discounted price on products linked to a stigmatized identity is perceived as insulting by consumers who have that stigmatized identity.
     This finding makes sense when you understand the reason. Researchers at University of British Columbia, Vrije Universiteit Amsterdam, and University of Alberta asked a sample of Latino Americans to look at a display of six beverage mugs, with one of the mugs inscribed “Proud to be Latino.” For some of the participants, the “Proud to be Latino” mug was labeled with a price 40% less than the price of the other mugs. For the remaining participants, all mugs carried the same price.
     Those told there was a discount subsequently had a less positive attitude toward the mug company and were more likely to say the company showed disrespect toward them.
     In a companion study where the participants were white Americans, this difference was not seen. Whether or not the “Proud to be Latino” mug in the set was being offered at a discount made no real difference in ratings of attitude toward the mug company and perceived disrespect toward the Latino-American community among the white American sample.
     The researchers’ explanation for this effect is that when a company offers a price discount only on a product linked to a group stigmatized by majority society, members of this stigmatized group think the company considers them to be inferior. Other studies in the set yielded evidence supporting this explanation, including LGBT consumers considering a water bottle bearing a rainbow design, African American consumers considering a water bottle labeled “Black Lives Matter,” and Asian American consumers considering a water bottle labeled “Asian Lives Matter.”
     A retailer’s offer of a price discount on items celebrating a stigmatized identity could be intended to counteract the stigma. It also could be intended to clear inventory of items which are not selling well because of the stigma. In any case, leaving members of a group of consumers feeling disrespected is a poor business practice.
     Still other of the researchers’ studies suggest three different ways a retailer can overcome the effect: 

• Partner with members of the stigmatized group to market the items 
• Simultaneously offer discounts on items not linked to the stigmatized group 
• Instead of offering a price discount, offer free shipping or buy-one-get-one-for-free

     Also helpful, says other research, are clear signals throughout your store and transactions that you welcome members of the stigmatized group spending their money and time with you.

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